IRR

IRR is the annualized return implied by how much money you invest, how much comes back, and when each payment occurs.

In technical terms, IRR is the discount rate that makes the net present value of the investment’s cash flows equal zero.

Also called Internal rate of return

IRR in round numbers

Putting in $300 and getting back $840 after five years, with no interim cash flows, works out to roughly a 23% IRR. Hanil’s default model runs five years, from the 2023 purchase to a planned 2028 exit, at about 1.76x gross, an IRR of about 12.0 percent. That is a forecast.

A five-year hold compounds to about 23%
Invest $300Year 0
Exit $840Year 5

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